Excel Activity: Capital Budgeting Tools Start with the partial model in the file Ch12 P25 Build a Model.xlsx. Gardial Fisheries is considering two mutually exclusive investments. The projects' expected net cash flows are as follows: Expected Net Cash Flows Year Project A Project B 0 -$440 -$640 1 -465 175 2 -310 175 3 -155 175 4 930 175 5 930 175 6 7 904 -310 175 175 The data has been collected in the Microsoft Excel file below. Download the spreadsheet and perform the required analysis to answer the questions below. Do not round intermediate calculations. Download spreadsheet Ch12 P25 Build a Model-ca72da.xlsx a. If each project's cost of capital is 10%, which project should be selected? Round your answers to the nearest cent. NPV (Project A): $ NPV (Project B): $ Project A 328.49 211.97 should be selected. If the cost of capital is 16%, what project is the proper choice? Round your answers to the nearest cent. NPV (Project A): $ 47.22 NPV (Project B): $ 66.75 Project B should be selected. b. Construct NPV profiles for Projects A and B. Choose the correct graph. A. NPV NPV Profiles B. NPV Profiles $1,200- $1,000- $1,200 $1,000 $800 $600 $400 NPV $200 $0 0% 5% 10% 15% 20% 25% 30% -$200 -$200 Cost of Capital -$400 -$400 ཎྞཾ ༔ རྞྞ ནྟི ཧི ནྟི ནྟི - Project A Project B 0% 5% 10% 15% 20% 25% 30% Cost of Capital Project A Project B C. D. NPV Profiles $1,200 NPV $1,000 $800 NPV Profiles $1,200- $1,000- $800 $600 $600 $400 NPV $400 $200 $200 $0 $0 0% 5% 10% 15% 20% 25% 30% 0% 5% 1000 15% 20% 25% 30% -$200 -$200 -$400 Cost of Capital Project A Cost of Capital Project B -$400 Project A - Project B The correct graph is graph C c. What is each project's IRR? (Hint: Using the Excel IRR function, set the guess parameter to be 10%.) Round your answers to two decimal places. IRR (Project A): 17.24 % IRR (Project B): 19.47 % d. What is the crossover rate, and what is its significance? (Hint: Using the Excel IRR function, set the guess parameter to be 10%.) Round your answer for the crossover rate to two decimal places and for the NPV to the nearest cent. The crossover rate is %. The crossover rate represents the cost of capital at which the two projects have the NPV of $ e. What is each project's MIRR at a cost of capital of 10%? At r = 16%? Round your answers to two decimal places. MIRR at r = 10% MIRR at r = 16% Project A Project B % % % % f. What is the regular payback period for these two projects? Round your answers to two decimal places. Regular payback period (Project A): Regular payback period (Project B): 4.48 years years g. At a cost of capital of 10%, what is the discounted payback period for these two projects? Round your answers to two decimal places. Discounted payback period (Project A): 4.88 years Discounted payback period (Project B): years h. What is the profitability index for each project if the cost of capital is 10%? Round your answers to three decimal places. Profitability index (Project A): Profitability index (Project B):